Going with the group in a competitive game of iterated reasoning

Seth Frey, Indiana University

Robert L Goldstone, Indiana University

Abstract

In some strategic games, thinking ahead about other players
reasoning can lead to better predictions about what they will do. In other games,
infinitely iterated reasoning ultimately prescribes random play. In an online
experiment of strategic thinking in groups, we tested participants in a game with
the formal structure of a random game, but the superficial structure of a game
that rewards iterated reasoning. We found that participants conformed to the
superficial structure of the game, and earned more than they would have by
playing randomly.
We estimated how many steps participants thought ahead in the game and matched it
to previous findings in iterated reasoning. We also discovered implicit
coordination at the group level. Participants unexpectedly matched
their degree of iterated thinking to each other.